Clinton said on Friday that George Mitchell, the US special envoy to the Middle East, would travel to the region to mediate the peace negotiations.

The talks will not be the face-to-face meetings the Obama administration had hoped to put in place, but would involve US officials meeting with one side at a time.

Negotiations between the Palestinians and Israel have been stalled since Israel's three-week assault on the Gaza Strip began in December 2008.

Attempts to restart the process last month collapsed when Israel announced construction of a new housing project in occupied East Jerusalem, which Palestinians see as the future capital of any independent state.

The Arab League issued a statement rejecting Israel's settlement policy in East Jerusalem at the end of a previous meeting in Libya in March.

But the leaders failed to reach consensus then on whether the Palestinians should resume the stalled talks with Israel.

On Saturday, the regional body reaffirmed its demand for an end to settlement construction, calling for "a complete end to settlements in the occupied Palestinian territories, including Jerusalem".

Saeb Erekat, the chief Palestinian negotiator, said a condition for Arab League support of continued talks would be a halt of settlement activity in the West Bank.

"If Israel builds one house in the West Bank, Palestinians will immediately stop the negotiations."